Planning Assumptions: Necessary But Often Inaccurate

The strategic planning process includes time dedicated to discussing and capturing planning assumptions. These often consist of thoughts, opinions, observations, and predictions of what the future may hold for our business and the stakeholders who depend on us.

Assumptions can be divided into internal and external factors. Internal considerations include matters of staffing and resource requirements, product and service offerings, production processes, marketing, and sales systems and understanding whether and how customer requirements may change during the planning period. 

External factors are viewed on several levels including the industry outlook, the broad economic climate, societal issues, and regulatory matters. Assumptions about the prospects for our customers, the industry they work in and the constituents they serve are also considered.

Establishment of planning assumptions is needed to help develop a planning platform. So needed in fact, that it must be done with rigor and informed by data. And they must be challenged in an environment of candor and trust.

The problem with developing assumptions is that for most of us, the future is informed largely by the past. Absent some major disruptive force, we tend to think about the future in much the same way as the present or by our most recent experiences. Why not, we have little else to go on.

Of course, the collective unease we feel about COVID-19 has to do with the contagious nature of the virus and the impact it can have on our health and well-being. It also has to do with the newness, the unexpected, the unforeseen, and the unanswerable.

In his book “Red Teaming,” Bryce Hoffman details methods and tools for effectively examining planning assumptions and testing them for validity. Through a series of questions and exercises, he notes inventive and stimulating ways to facilitate team discussion. Here are two examples. 

What would we have to do to ensure that our plan will fail? If we were our closest competitor, what would we do first to put our organization out of business? 

Anticipating trends and developing effective planning assumptions is as much art as it is science. Through a combination of accurate, reliable data, intuition, and experience and a structured, facilitated process, a proper foundation for effective planning can be formed.

For more information and examples, contact me at truncalephd@gmail.com.